-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, KyBJVAc1fV+BXyG6C/gI9FNzuGNPHgsrqOs3y7FUn38fvfCoCs9HvnP1oKTD8C3w 24SS7IGt49imt/OTGya+Rg== 0000783287-96-000011.txt : 19960702 0000783287-96-000011.hdr.sgml : 19960702 ACCESSION NUMBER: 0000783287-96-000011 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19960331 FILED AS OF DATE: 19960513 SROS: AMEX FILER: COMPANY DATA: COMPANY CONFORMED NAME: PUBLIC STORAGE PROPERTIES XVIII INC CENTRAL INDEX KEY: 0000870376 STANDARD INDUSTRIAL CLASSIFICATION: 6798 IRS NUMBER: 954336616 STATE OF INCORPORATION: CA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-10832 FILM NUMBER: 96561838 BUSINESS ADDRESS: STREET 1: 600 N BRAND BLVD STREET 2: SUITE 300 CITY: GLENDALE STATE: CA ZIP: 91203-1241 BUSINESS PHONE: 8182448080 10-Q 1 10-Q UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q [X] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the period ended March 31, 1996 or [ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the transition period from to ----------- -------------- Commission File Number 1-10832 ------- PUBLIC STORAGE PROPERTIES XVIII, INC. ---------------------------------------------------- (Exact name of registrant as specified in its charter) California 95-4336616 - - ------------------------------- ----------------------- (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification Number) 701 Western Avenue Glendale, California 91201-2349 - - ---------------------------------------- --------------------- (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: (818) 244-8080 -------------- Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days. Yes X No --- --- The number of shares outstanding of the Company's classes of common stock as of March 31, 1996: 2,775,900 shares of $.01 par value Series A shares 324,989 shares of $.01 par value Series B shares 920,802 shares of $.01 par value Series C shares -------------------------------------------------- INDEX Page ---- PART I. FINANCIAL INFORMATION Condensed Balance Sheets at March 31, 1996 and December 31, 1995 2 Condensed Statements of Income for the three months ended March 31, 1996 and 1995 3 Condensed Statement of Shareholders' Equity for the three months ended March 31, 1996 4 Condensed Statements of Cash Flows for the three months ended March 31, 1996 and 1995 5 Notes to Condensed Financial Statements 6 Management's Discussion and Analysis of Financial Condition and Results of Operations 7-9 PART II. OTHER INFORMATION PUBLIC STORAGE PROPERTIES XVIII, INC. CONDENSED BALANCE SHEETS March 31, December 31, 1996 1995 ----------- ----------- (Unaudited) ASSETS ------ Cash and cash equivalents $ 703,000 $ 484,000 Rent and other receivables 46,000 56,000 Prepaid expenses 310,000 433,000 Real estate facilities at cost: Building, land improvements and equipment 42,469,000 42,410,000 Land 25,073,000 25,073,000 ---------- ---------- 67,542,000 67,483,000 Less accumulated depreciation (12,862,000) (12,459,000) ----------- ----------- 54,680,000 55,024,000 ---------- ---------- Total assets $55,739,000 $55,997,000 =========== =========== LIABILITIES AND SHAREHOLDERS' EQUITY ------------------------------------ Accounts payable $ 742,000 $ 926,000 Dividends payable 930,000 1,677,000 Advance payments from renters 391,000 350,000 Note payable 6,500,000 5,900,000 Shareholders' equity: Series A common, $.01 par value, 4,983,165 shares authorized, 2,775,900 shares issued and outstanding (2,779,500 shares issued and outstanding in 1995) 28,000 28,000 Convertible Series B common, $.01 par value, 324,989 shares authorized, issued and outstanding 3,000 3,000 Convertible Series C common, $.01 par value, 920,802 shares authorized, issued and outstanding 9,000 9,000 Paid-in-capital 51,022,000 51,083,000 Cumulative income 19,047,000 18,024,000 Cumulative distributions (22,933,000) (22,003,000) ----------- ----------- Total shareholders' equity 47,176,000 47,144,000 ---------- ---------- Total liabilities and shareholders' equity $55,739,000 $55,997,000 =========== =========== See accompanying notes. 2 PUBLIC STORAGE PROPERTIES XVIII, INC. CONDENSED STATEMENTS OF INCOME (UNAUDITED) Three Months Ended March 31, ------------------------ 1996 1995 ---------- ---------- REVENUES: Rental income $2,645,000 $2,521,000 Interest income 3,000 4,000 ---------- ---------- 2,648,000 2,525,000 ---------- ---------- COSTS AND EXPENSES: Cost of operations 882,000 742,000 Management fees paid to affiliates 139,000 149,000 Depreciation 403,000 410,000 Administrative 65,000 75,000 Interest expense 136,000 93,000 ---------- ---------- 1,625,000 1,469,000 ---------- ---------- NET INCOME $1,023,000 $1,056,000 ========== ========== Primary earnings per share - Series A $ 0.33 $ 0.32 ========== ========== Fully diluted earnings per share - Series A $ 0.25 $ 0.25 ========== ========== Dividends declared per share: Series A $ 0.30 $ 0.28 ========== ========== Series B $ 0.30 $ 0.28 ========== ========== Weighted average Common shares outstanding: Primary - Series A 2,775,900 2,996,358 ========== ========== Fully diluted - Series A 4,021,691 4,242,149 ========== ========== See accompanying notes. 3 Public Storage Properties XVIII, Inc. Condensed Statement of Shareholders' Equity (Unaudited)
Convertible Convertible Series A Series B Series C Paid-in Shares Amount Shares Amount Shares Amount Capital --------- ------- ------- ------ ------- ------ ----------- Balances at December 31, 1995 2,779,500 $28,000 324,989 $3,000 920,802 $9,000 $51,083,000 Net income - - - - - - - Repurchase of shares (3,600) - - - - - (61,000) Cash distributions declared: $.30 per share - Series A - - - - - - - $.30 per share - Series B - - - - - - - --------- ------- ------- ------ ------- ------ ----------- Balances at March 31, 1996 2,775,900 $28,000 324,989 $3,000 920,802 $9,000 $51,022,000 ========= ======= ======= ====== ======= ====== ===========
Cumulative Total Net Cumulative Shareholders' Income Distributions Equity ----------- ------------ ----------- Balances at December 31, 1995 $18,024,000 ($22,003,000) $47,144,000 Net income 1,023,000 - 1,023,000 Repurchase of shares - - (61,000) Cash distributions declared: $.30 per share - Series A - (832,000) (832,000) $.30 per share - Series B - (98,000) (98,000) ----------- ------------ ----------- Balances at March 31, 1996 $19,047,000 ($22,933,000) $47,176,000 =========== ============ ===========
See accompanying notes. 4 PUBLIC STORAGE PROPERTIES XVIII, INC. CONDENSED STATEMENTS OF CASH FLOWS (UNAUDITED) Three Months Ended March 31, 1996 1995 ----------- ----------- Cash flows from operating activities: Net income $ 1,023,000 $ 1,056,000 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation 403,000 410,000 Decrease in rent and other receivables 10,000 15,000 Increase in prepaid expenses -- (1,000) Amortization of prepaid management fees 123,000 -- Decrease in accounts payable (184,000) (240,000) Increase in advance payments from renters 41,000 3,000 ----------- ----------- Total adjustments 393,000 187,000 ----------- ----------- Net cash provided by operating activities 1,416,000 1,243,000 ----------- ----------- Cash flows from investing activities: Additions to real estate facilities (59,000) (23,000) ----------- ----------- Net cash used in investing activities (59,000) (23,000) Cash flows from financing activities: Distributions paid to shareholders (1,677,000) (939,000) Net borrowings on note payable to Bank 600,000 1,100,000 Purchase of Company Series A common stock (61,000) (622,000) ----------- ----------- Net cash used in financing activities (1,138,000) (461,000) ----------- ----------- Net increase in cash and cash equivalents 219,000 759,000 Cash and cash equivalents at the beginning of the period 484,000 301,000 ----------- ----------- Cash and cash equivalents at the end of the period $ 703,000 $ 1,060,000 =========== =========== See accompanying notes. 5 PUBLIC STORAGE PROPERTIES XVIII, INC. NOTES TO CONDENSED FINANCIAL STATEMENTS (UNAUDITED) 1. The accompanying unaudited condensed financial statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to such rules and regulations, although management believes that the disclosures contained herein are adequate to make the information presented not misleading. These unaudited condensed financial statements should be read in conjunction with the financial statements and related notes appearing in the Company's Form 10-K for the year ended December 31, 1995. 2. In the opinion of management, the accompanying unaudited condensed financial statements reflect all adjustments, consisting of only normal accruals, necessary to present fairly the Company's financial position at March 31, 1996 and December 31, 1995, the results of its operations for the three months ended March 31, 1996 and 1995 and its cash flows for the three months then ended. 3. The results of operations for the three months ended March 31, 1996 are not necessarily indicative of the results expected for the full year. 4. In 1995, the Company prepaid eight months of 1996 management fees at a total cost of $329,000. The Company expensed $123,000 of the 1996 prepaid management fees for the three months ended March 31, 1996. The balance of prepaid management fees, $206,000, is included in prepaid expenses in the Balance Sheet at March 31, 1996. 6 PUBLIC STORAGE PROPERTIES XVIII, INC. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The following is management's discussion and analysis of certain significant factors occurring during the periods presented in the accompanying Condensed Financial Statements. RESULTS OF OPERATIONS. - - ---------------------- The Company's net income for the three months ended March 31, 1996 was $1,023,000 compared to $1,056,000 for the three months ended March 31, 1995, representing a decrease of $33,000 or 3%. This decrease is primarily the result of an increase in interest expense. Net operating income of the properties (rental income less cost of operations, management fees paid to affiliates, and depreciation expense) was virtually unchanged at $1,221,000 for the three months ended March 31, 1996 versus $1,220,000 for the three months ended March 31, 1995. Rental income for the three months ended March 31, 1996 and 1995 was $2,645,000 and $2,521,000, respectively, representing an increase of $124,000 or 5%. The Company's mini-warehouse operations contributed $112,000 to the increase in rental revenues. This increase is primarily attributable to an increase in occupancy levels and rental rates at the Company's California, New York and Washington properties. The Company's San Diego, California business park experienced a slight increase in rental revenue due to an increase in rental rates. The Company's mini-warehouse operations had weighted average occupancy levels of 86% and 85% for the three month periods ended March 31, 1996 and 1995, respectively. The Company's business park facility had a weighted average occupancy level of 89% and 92% for the three month periods ended March 31, 1996 and 1995, respectively. Cost of operations (including management fees paid to affiliates and depreciation expense) increased to $1,424,000 from $1,301,000 for the three months ended March 31, 1996 and 1995, respectively, representing an increase of $123,000 or 9%. This increase is primarily attributable to an increase in property tax expense and repairs and maintenance costs. The increase in property tax expense is primarily due to one-time tax refunds received in the first quarter of 1995 from appealing a prior year tax assessment at the Company's Inglewood, California and San Diego business park. Repairs and maintenance costs increased during the first quarter of 1996 mainly due to an increase in snow removal costs associated with higher than normal snow levels experienced at the Company's mini-warehouse properties in the eastern states. 7 In 1995, the Company prepaid eight months of 1996 management fees on its mini-warehouse operations (based on the management fees for the comparable period during the calendar year immediately preceding the prepayment) discounted at the rate of 14% per year to compensate for early payment. During the three month period ended March 31, 1996, the Company expensed $123,000 of prepaid management fees. The amount is included in management fees paid to affiliates in the condensed statements of income. As a result of the prepayment, the Company saved approximately $16,000 in management fees, based on the management fees that would have been payable on rental income generated in the three months ended March 31, 1996 compared to the amount prepaid. The Company's interest expense increased to $136,000 from $93,000 during the three months ended March 31, 1996 and 1995, respectively, representing an increase of $43,000. The increase is due to a higher outstanding loan balance in 1996 over 1995. LIQUIDITY AND CAPITAL RESOURCES. - - -------------------------------- Cash flows from operating activities ($1,416,000 for the three months ended March 31, 1996) and borrowing against the Company's credit facility were sufficient to meet all current obligations and distributions of the Company during the three months ended March 31, 1996. Management expects cash flows from operations will be sufficient to fund capital expenditures and quarterly distributions. The Company's Board of Directors has authorized the Company to purchase up to 1,100,000 Series A common stock. As of March 31, 1996, the Company had repurchased 961,474 shares of Series A common stock, of which 3,600 were purchased in the first quarter of 1996. 8 In November 1994, the Company obtained an unsecured non-revolving credit facility with a bank for borrowings up to $5,000,000 for working capital purposes and general corporate purposes. In 1995, the Company renegotiated its credit facility to increase the borrowings up to $7,000,000, change the credit facility from non-revolving to revolving, extend the conversion date to a term loan to October 1, 1996 and extend the maturity date to September 30, 2001. Outstanding borrowings on the credit facility, at the Company's option, bear interest at either the bank's prime rate plus .25% (8.5% at March 31, 1996) or the bank's LIBOR rate plus 2.25% (7.75% at March 31, 1996). Interest is payable monthly. Principal will be payable quarterly beginning on October 1, 1996. On September 30, 2001, the remaining unpaid principal and interest is due and payable. At March 31, 1996, the outstanding balance on the credit facility was $6,500,000. In April 1996, the Company borrowed an additional $450,000 on its line of credit facility. The Company is subject to certain covenants including cash flow coverages and dividend restrictions. As of March 31, 1996, the Company was in compliance with the covenants of the credit facility. The Company has elected and intends to continue to qualify as a real estate investment trust ("REIT") for federal income tax purposes. As a REIT, the Company must meet, among other tests, sources of income, share ownership, and certain asset tests. The Company is not taxed on that portion of its taxable income which is distributed to its shareholders provided that at least 95% of its taxable income is so distributed to its shareholders prior to filing of the Company's tax return. The primary difference between book income and taxable income is depreciation expense. In 1995, the Company's federal tax depreciation was $1,196,000. The bylaws of the Company provide that, during 1999, unless shareholders have previously approved such a proposal, the shareholders will be presented with a proposal to approve or disapprove (a) the sale or financing of all or substantially all of the properties and (b) the distribution of the proceeds from such transaction and, in the case of a sale, the liquidation of the Company. SUPPLEMENTAL INFORMATION. - - ------------------------- The Company's funds from operations ("FFO") is defined generally by the National Association of Real Estate Investment Trusts as net income before loss on early extinguishment of debt and gain on disposition of real estate, plus depreciation and amortization. FFO for the three months ended March 31, 1996 and 1995 was $1,426,000 and $1,466,000, respectively. FFO is a supplemental performance measure for equity Real Estate Investment Trusts used by industry analysts. FFO does not take into consideration principal payments on debt, capital improvements, distributions and other obligations of the Company. The only depreciation or amortization that is added to income to derive FFO is depreciation and amortization directly related to physical real estate. All depreciation and amortization reported by the Company relates to physical real estate and does not include any depreciation or amortization related to goodwill, deferred financing costs or other intangibles. FFO is not a substitute for the Company's net cash provided by operating activities or net income computed in accordance with generally accepted accounting principles, as a measure of liquidity or operating performance. 9 PART II. OTHER INFORMATION ITEMS 1 through 5 are inapplicable. ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K. --------------------------------- (A) EXHIBITS: The following exhibit is included herein: (27) Financial Data Schedule B) REPORTS ON 8-K None SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. DATED: May 13, 1996 PUBLIC STORAGE PROPERTIES XVIII, INC. BY: /s/ Ronald L. Havner, Jr. ------------------------------ Ronald L. Havner, Jr. Vice President and Chief Financial Officer 10 EX-27 2 FDS --ARTICLE 5 OF REGULATION S-X
5 0000870376 PUBLIC STORAGE PROPERTIES XVIII, INC. 3-mos Dec-31-1995 Jan-01-1996 Mar-31-1996 703,000 0 356,000 0 0 1,059,000 67,542,000 (12,862,000) 55,739,000 2,063,000 6,500,000 0 0 40,000 47,136,000 55,739,000 0 2,648,000 0 1,424,000 65,000 0 136,000 1,023,000 0 1,023,000 0 0 0 1,023,000 .33 .25
-----END PRIVACY-ENHANCED MESSAGE-----